What Is a Stakeholder Essay

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Stakeholder Ethics

This report covers stakeholder ethics, how the topic is defined and how companies should handle the same in a way that satisfies the right people and disregards others that are not reputable and/or reasonable.

While a general set of ethics and behaviors is easily and agreeably called for, satiating and satisfying every group of stakeholders involved is often a losing game but the right groups of stakeholders can and should be satisfied and catered to.

First Point-of-View

Ethics that are based only on the law and compliance with it and nothing else

Second Point-of-View

Ethics that mandate compliance with the law and extensive circumstances that take all internal and external stakeholders into account. The environment and animals can also be "stakeholders

Third Point-of-View

a. A balance between complying with the law and corporate/social responsibility while not getting ridiculous and/or spending money that give little/no benefit to the firm and/or puts the firm at risk of not serving clients effectively.


13 March 2014

Stakeholder Ethics

Gone are the days of black and white ethics as it pertains to operating a business while at the same time retaining the utmost in integrity and stewardship for all stakeholders involved. The main reason for this is the entrenched and pervasive polarization that now exists within the American and global business sphere. Words like "stakeholder" and "ethics" as it pertains to whomever those "stakeholders" are literally differ from group to group or even person to person. Simple compliance with the law is far from being the only concern when terms like "blood diamonds" and "corporate farming" are tossed around, among many others. While a general set of ethics and behaviors is easily and agreeably called for, satiating and satisfying every group of stakeholders involved is often a losing game but the right groups of stakeholders can and should be satisfied and catered to.

The United States and the rest of the industrialized world has clearly broken into two major strains of thought. Whether one classify or refer to it as "left vs. right," "Keynes vs. supply-siders" or some other set of terms and buzzwords, it is clear that there are two extremely divergent viewpoints that exist out there as it pertains to how a business can and should operate and their burdens to stakeholders. Indeed, there is a disagreement in many circles as to who the stakeholders even are to begin with. There are the obvious stakeholders such as investors, employees, executives and stockholders. However, one can easily lump in groups like city residents, state residents, and national residents. Depending on the reach and operational structure, whether it is based on what is being done or where it is being done, the people potentially impacted by a firm's operations is by no means limited to a small geographical area or even just to the customers, owners and employees of the firm in question. A good example of this would be the pending merger of Comcast and Time Warner. While some may yawn at yet another group of firms merging, the ramifications and implications of two major media heavyweights that touch many corners of television, internet access and movies (just to name a few) are not hard to decipher if one simply pays attention. Many of the same questions and implications were posed before the recent merger attempt between AT&T and T-Mobile was shot down by antitrust regulators.

However, while arguments can be made all day about more abstract and convenience-oriented business structures, one can paint a much more dire and mine-filled picture when speaking of business sectors like construction, mining and energy. Even if it was patently illegal, the price manipulation of Enron laid bare that the "stakeholders" impacted their depraved deeds are quite wide-ranging and the damage knows little bounds within the affected areas. However, the examples offered thus far are fairly extreme and exceedingly rare. Even so, it is a good and proper point of argument and analysis to look at what it truly means to be ethical and morally upstanding as it relates to a business and who the affected stakeholders truly are. In the end, the identification of these stakeholders can and should lead to how those situations and people will be treated in terms of how the business does or does not choose to operate.

What causes such strife a lot of times is that the more traditional stakeholders of a firm are those that have "skin" in the game, those being the employees who rely on a job and the investors who want return on the money that they are pitching in. While many or even most industries have a fairly clear playing field as it relates to who the stakeholders are and how to ethically and properly serve them, there are some fields that are often demonized and assailed for their opportunism and their overall business tactics. Common examples would be pawn shops and payday loan companies. The former gives people a fraction of what a product is worth to someone that is typically hard up (if not desperate) for money while the latter charges interest rates in the hundreds of percent (annualized) to people that often cannot get loans from more reputable lenders that charge much lower rates like banks and credit unions (Read). The behaviors of these two types of businesses are heavily regulated but many say that even if a pawn shop or payday loan place follows the law to the letter, they are still being unethical and are exploiting people that are in need. However, the devil's advocate response would be what those people would do in the same situation if the pawn shops and payday loan shops disappear. It is hard to be certain, but it would probably be chaotic…if not violent…as it is clear that poverty and desperation are often precursors to crimes like robbery, burglary and larceny in general although some disagree with such causality at least to some degree (Riggs). Another caveat to demonizing these businesses is that people are not being forced to do anything and the laws involved are rather stringent. Indeed, emergencies do happen, credit ratings are sometimes poor and there are plenty of other examples that are at least similar to these "bad" ones in one or more ways such short sales, foreclosures and repossessions (Wiggin). Banks and such often care not all that much if they do not get paid for a certain amount of time even if a loss of a job, the death of a breadwinner or a disability is involved…the world still goes on.

As with all things, what has been discussed thus far is that depravity and the definition of a stakeholder can differ quite a bit. Also, the ethics of how said stakeholder should or should not be treated also differs. However, simply leaving the market to form and shape itself can be a bad idea and one need only look at black markets like stolen cars and drugs to see what can happen if greed alone is allowed to be the only driver of whether something is worth doing or not. At the same time, some "advocate" and talking heads go entirely too far and/or push a very narrow view on others. To some, the word "profit" is obscene and many actually view businesses as the piggy banks of the populace and government as a means to fund social safety net and wealth redistribution frameworks. Even in the United States, roughly one half of the federal budget it going to just three transfer payment programs, those being Social Security, Medicare and Medicaid. Such frameworks are much more protracted and advanced in areas like Canada and Western Europe. A major theme that should become clear by now is that there is a way to strike a balance. The presence of pawn shops and payday loans may not be optimal, but they are heavily regulated and they do serve a purpose of giving people an outlet they otherwise would not have. The social safety net programs of the world get a lot of money sunk into them and a lot of that money goes to waste, but the alternative would be soulless.

However, the yardsticks that some people are using are odd to insane. The aforementioned use of the word "profit" as if it is a dirty word and that the root goal of a business is to make a profit is nonsensical. Also, many people presuppose that government is the solution and that business is always evil and must be reined in. This is also a fallacy because government is often ridiculously inefficient, their good intentions get laid to waste by laughable results and government seems entirely too willing to try and keep raising budgets and tightening the regulation noose more and more. It is true that businesses can be evil but they fund all taxes paid in countries in one way or another and perhaps government should not deign to tell customers what they should or…[continue]

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